Additional Materials:

Contact:

What GAO Found

GAO's analysis of the Agricultural Quarantine Inspection (AQI) fee and cost data revealed a more than $325 million gap between fee revenues and total program costs in fiscal year 2011, or 38 percent of AQI program costs. The program, which is co-administered by the Department of Agriculture (USDA) Animal and Plant Health Inspection Service (APHIS) and Department of Homeland Security (DHS) Customs and Border Patrol (CBP), has a gap for several reasons: 1) APHIS's authority does not permit it to charge all persons seeking entry to the United States (e.g., pedestrians) and does not permit it to charge the costs of those inspections to others; 2) APHIS has chosen not to charge some classes of passengers, citing administrative fee collection difficulties; 3) CBP does not charge a portion of all primary inspections to agriculture functions, as required by CBP guidance; 4) APHIS does not consider all imputed costs (that is, costs incurred by other agencies on behalf of the AQI program) when setting fees; and 5) the allowable rates for overtime services are misaligned with the personnel costs of performing those services. APHIS is considering fees that would better align many, but not all, AQI fees with related inspection activity costs. APHIS and CBP can take additional steps to better align fees with costs; however, additional authority will be needed to fully recover all program costs.

Contrary to APHIS-CBP agreements and APHIS policy, the distribution of fee collections between CBP and APHIS is significantly misaligned with AQI costs. In 2005, CBP and APHIS agreed to divide AQI collections in proportion to each agency's share of AQI costs. However, in fiscal year 2011, for example, CBP incurred over 80 percent of total program costs but received only 60 percent of collections, while APHIS incurred 19 percent of program costs but retained 36 percent of collections. CBP bridges the gap between its AQI costs and its share of the fee revenues with its annual appropriation. In keeping with its authorities and with good practices for fee-funded programs, APHIS carries over a portion of AQI collections from year to year to maintain a shared APHIS-CBP reserve to provide a cushion against unexpected declines in fee collections. APHIS's stated goal is to maintain a 3- to 5-month reserve but the preliminary fee proposal would fund the reserve at a level higher than the 5 month maximum. Further, the 5-month maximum target balance is the amount officials say they would need to completely shut down the program, and therefore does not reflect realistic program risks. Further, this is more than the amount required to cover shortfalls during both the 2009 financial crisis and the events of September 11, 2001, and would increase reliance on appropriated funds to cover current program costs.

APHIS's and CBP's collection processes do not provide reasonable assurance that all AQI fees due are collected. Specifically, APHIS does not collect AQI fees for railcars consistent with its regulations, resulting in a revenue loss of $13.2 million in 2010. Further, CBP does not verify that it collects fees due for every commercial truck, private aircraft, and private vessel, resulting in an unknown amount of revenue loss annually. CBP has tools available to help remedy these issues but does not require their use. Until APHIS and CBP improve oversight of these collection processes, they will continue to forgo revenue due the government, which will increase reliance on appropriated funds to cover program costs.

Why GAO Did This Study

The AQI program guards against agriculture threats by inspecting international passengers and cargo at U.S. ports of entry, seizing prohibited material, and intercepting foreign agricultural pests. The program, which cost $861 million in 2011, is funded from annual appropriations and user fees. GAO has reported several times on the need to revise the fees to cover program costs as authorized. In 2010, APHIS initiated a review of AQI costs and fee design options. APHIS and CBP are considering options for a new fee structure. Pending departmental approval, APHIS expects to issue a proposed rule in fall 2013. GAO was asked to examine issues related to the AQI fees. This report examines 1) the fees currently charged and proposed revisions; 2) how fee revenues are allocated between the agencies; and 3) the extent to which fee collection processes provide reasonable assurance that all AQI fees due are collected. To do this, GAO reviewed AQI fee and cost data, and relevant laws, regulations, and policies; observed inspections at ports of entry; and interviewed APHIS and CBP officials.

What GAO Recommends

GAO is making a number of recommendations aimed at more fully aligning fees with program costs, aligning the division of fees between APHIS and CBP with their respective costs, and ensuring that fees are collected when due. Further, GAO suggests Congress amend the AQI fee authority to allow the Secretary of Agriculture to set fee rates to recover the full costs of the AQI program. USDA and DHS generally agreed with the recommendations.

Matters for Congressional Consideration

Status: Open

Comments: As of January 2015, Congress had not passed legislation to give the Secretary of Agriculture authority to set fee rates to fully recover the aggregate costs of Agricultural Quarantine Inspection (AQI) services, as GAO suggested in March 2013. In the 113th Congress, the Savings, Accountability, Value, and Efficiency Act was introduced in the House and referred to the Committees on Oversight and Government Reform, Appropriations, Agriculture, Energy and Commerce, and Ways and Means. The current AQI fee authority does not permit the U.S. Department of Agriculture to set AQI fees to recover the aggregate estimated costs of AQI services. Authorizing the Secretary of Agriculture to set fee rates to recover the full costs of the Agricultural Quarantine Inspection program would achieve cost savings for the government by reducing the program's reliance on U.S. Customs and Border Protection's annual Salaries and Expenses appropriation.

Matter: In light of declining discretionary budgets, to reduce or eliminate the reliance of the AQI program on taxpayer funding, Congress should consider allowing USDA to set AQI fees to recover the aggregate estimated costs of AQI services--thereby allowing the Secretary of Agriculture to set fee rates to recover the full costs of the AQI program.

Status: Open

Comments: As of January 2015, Congress had not passed legislation to give the Secretary of Agriculture authority to assess Agricultural Quarantine Inspection (AQI) fees on private vessels, private aircraft, and commercial buses and include in those fees the costs of AQI services for the passengers on those vehicles. In the 113th Congress, the Savings, Accountability, Value, and Efficiency Act was introduced in the House and referred to the Committees on Oversight and Government Reform, Appropriations, Agriculture, Energy and Commerce, and Ways and Means. The current AQI fee authority does not permit the U.S. Department of Agriculture to assess AQI fees on private vessels, private aircraft and commerical buses and to recover, through those fees, the costs of AQI services for the passengers on those vehicles.

Matter: Congress should consider amending USDA's authorization to assess AQI fees on bus companies, private vessels, and private aircraft and include in those fees the costs of AQI services for the passengers on those buses, private vessels, and private aircraft.

Recommendations for Executive Action

Status: Open

Comments: In April 2014, the USDA Animal and Plant Health Inspection Service (APHIS) published a proposed rule to add new agricultural quarantine and inspection (AQI) fee categories and adjust the rates of some of the existing fee categories. According to APHIS, the proposed adjustments are designed to recover the full costs of providing AQI services, including imputed costs borne by other agencies. According to an APHIS official, as of January 2015, APHIS plans to publish a final rule by the spring of 2015.

Recommendation: To help ensure that USDA considers full AQI program costs when setting AQI fee rates, the Secretary of Agriculture should include all imputed costs borne by other federal agencies and attributable to the AQI program.

Agency Affected: Department of Agriculture

Status: Open

Comments: According to DHS's May 2013 statement of actions to address the recommendations in GAO-13-268, CBP will (1) review and revise current policies and guidance for its processes to ensure that it accurately captures the work activities performed by CBP officers; (2) develop methodology and reporting requirements; (3) regularly review implementation of these processes and requirements; and (4) require CMIS training for employees that have access to create schedules. As of March 2014, according to CBP officials, CBP is working to update process and procedural guidance for appropriate logging and reporting of work activities and also updating training policies and reviewing procedures to help standardize practices across ports of entry. CBP also held Cost Management Information System training sessions in August 2013 and January 2014. CBP did not provide updated information in response to GAO's November 2014 request.

Recommendation: To help ensure that USDA considers full AQI program costs when setting AQI fee rates, the Secretary of Homeland Security should direct CBP to update and widely disseminate comprehensive guidance to ports on the correct use and review of Cost Management Information System (CMIS) codes. Specifically, the guidance should reiterate that a portion of CBP officers' primary inspection time should be charged to agriculture and cover how, and with what frequency, ports should conduct work studies to determine the correct allocation of staff time. CBP should also consider making CMIS training mandatory for CMIS practitioners.

Agency Affected: Department of Homeland Security

Status: Open

Comments: In April 2014, the USDA Animal and Plant Health Inspection Service (APHIS) published a proposed rule to add new agricultural quarantine and inspection (AQI) fee categories, including a new fee on cruise vessel passengers. According to an APHIS official, as of January 2015, APHIS plans to publish a final rule by the spring of 2015.

Recommendation: To help ensure that fee rates are set to recover program costs, as authorized, and to enhance economic efficiency and equity with consideration of the administrative burden, the Secretary of Agriculture should establish an AQI cruise passenger fee aligned with the costs of inspecting cruise passengers and vessels and collected using the existing processes for collecting cruise passenger customs fees.

Agency Affected: Department of Agriculture

Status: Open

Comments: In April 2014, the USDA Animal and Plant Health Inspection Service (APHIS) published a proposed rule to add new agricultural quarantine and inspection (AQI) fee categories and adjust the rates of some of the existing fee categories. However, under the proposed rule, rail passengers would continue to be exempt from the AQI fees. According to an APHIS official, as of January 2015, APHIS plans to publish a final rule by the spring of 2015.

Recommendation: To help ensure that fee rates are set to recover program costs, as authorized, and to enhance economic efficiency and equity with consideration of the administrative burden, the Secretary of Agriculture should establish a fee for passenger railcars aligned with the costs of inspecting rail passengers and railcars and collected using the existing processes for collecting passenger railcar customs fees.

Agency Affected: Department of Agriculture

Status: Open

Comments: In April 2014, the USDA Animal and Plant Health Inspection Service (APHIS) published a proposed rule to add new agricultural quarantine and inspection (AQI) fee categories and adjust the rates of some of the existing fee categories. The proposed fee adjustments would remove the caps on the vessel and railcar fees. According to an APHIS official, as of January 2015, APHIS plans to publish a final rule by the spring of 2015.

Recommendation: To help ensure that fee rates are set to recover program costs, as authorized, and to enhance economic efficiency and equity with consideration of the administrative burden, the Secretary of Agriculture should eliminate caps on the commercial vessel and commercial rail AQI fees.

Agency Affected: Department of Agriculture

Status: Open

Comments: In April 2014, the USDA Animal and Plant Health Inspection Service (APHIS) published a proposed rule to add new agricultural quarantine and inspection (AQI) fee categories and adjust the rates of some of the existing fee categories. According to APHIS, the revised fee rates align the truck fee with AQI costs, while maintaining an incentive for trucks to use transponders. According to an APHIS official, as of January 2015, APHIS plans to publish a final rule by the spring of 2015.

Recommendation: To help ensure that fee rates are set to recover program costs, as authorized, and to enhance economic efficiency and equity with consideration of the administrative burden, the Secretary of Agriculture should set truck fee rates to recover the costs of AQI services for trucks while maintaining a financial incentive for trucks to use transponders.

Agency Affected: Department of Agriculture

Status: Open

Comments: In April 2014, the USDA Animal and Plant Health Inspection Service (APHIS) published a proposed rule to add new agricultural quarantine and inspection (AQI) fee categories and adjust the rates of some of the existing fee categories. Under the proposed rule, bus passengers would continue to be exempt from the AQI fees. However, the notice of proposed rule notes that APHIS plans to gather additional information on possible options for collecting a bus passenger fee in the future. According to an APHIS official, as of January 2015, APHIS plans to publish a final rule by the spring of 2015.

Recommendation: To help ensure that fee rates are set to recover program costs, as authorized, and to enhance economic efficiency and equity with consideration of the administrative burden, the Secretary of Agriculture should recover the costs of AQI services for buses and bus passengers by either establishing a bus passenger fee that is remitted by the bus companies or seeking legislative authority to establish a bus fee that covers the costs of bus passenger inspections.

Agency Affected: Department of Agriculture

Status: Open

Comments: According to DHS's May 2013 statement of actions to address the recommendations in GAO-13-268, CBP has examined the reimbursement rates for overtime and proposed a rule on revised overtime rates. The proposed rule, which would increase overtime rates to cover the anticipated costs, is under review by the USDA General Counsel. In October 2013, CBP told us that implementation of this recommendation is awaiting finalization of the USDA rule. In April 2014, the USDA Animal and Plant Health Inspection Service (APHIS) published a proposed rule to increase the fees for overtime services for agricultural and quarantine inspection (AQI) services. According to APHIS, the adjustment would align the fee rates with costs. According to an APHIS official, as of January 2015, APHIS plans to publish a final rule by the spring of 2015.

Recommendation: To align reimbursable overtime revenues with the costs of those agriculture inspections, the Secretaries of Agriculture and Homeland Security should work together to amend overtime regulations for agriculture services so that reimbursable overtime rates that CBP and APHIS charge are aligned with the costs of those services.

Agency Affected: Department of Homeland Security

Status: Open

Comments: In April 2014, the USDA Animal and Plant Health Inspection Service (APHIS) published a proposed rule to increase the fees for overtime services for agricultural and quarantine inspection (AQI) services. According to APHIS, the adjustment would align the fee rates with costs. According to an APHIS official, as of January 2015, APHIS plans to publish a final rule by the spring of 2015.

Recommendation: To align reimbursable overtime revenues with the costs of those agriculture inspections, the Secretaries of Agriculture and Homeland Security should work together to amend overtime regulations for agriculture services so that reimbursable overtime rates that CBP and APHIS charge are aligned with the costs of those services.

Agency Affected: Department of Agriculture

Status: Closed - Implemented

Comments: According to DHS's May 2013 statement of actions to address the recommendations in GAO-13-268, CBP will review its policies, provide additional training and guidance, and ensure proper administrative controls and oversight to provide reasonable assurance that ports consistently charge for agriculture overtime services that are eligible for reimbursement and deny agriculture-related reimbursable overtime services to entities with bills more than 90 days past due. In May 2014, CBP implemented the recommendation by (1) establishing protocols and procedures for optimal utilization of agriculture reimbursable overtime, (2) disseminating guidance and trade notices, and (3) training subject matter experts on reimbursable overtime.

Recommendation: To align reimbursable overtime revenues with the costs of those agriculture inspections the Secretary of Homeland Security should (1) ensure that ports consistently charge for agriculture overtime services that are eligible for reimbursement and (2) deny agriculture-related reimbursable overtime inspection services to entities with bills more than 90 days past due, consistent with APHIS regulations.

Agency Affected: Department of Homeland Security

Status: Open

Comments: In April 2014, the USDA Animal and Plant Health Inspection Service (APHIS) published a proposed rule to add new agrigultural quarantine and inspection (AQI) fee catetories and adjust the rates of some of the existing fee categories. However, under the proposed rule, APHIS would not charge fees for commodity import permits or pest import permits. According to an APHIS official, as of January 2015, APHIS plans to publish a final rule by the spring of 2015.

Recommendation: To help ensure that AQI fee rates are structured to maximize economic efficiency and equity while minimizing administrative burden, the Secretary of Agriculture should charge user fees for AQI permit applications.

Agency Affected: Department of Agriculture

Status: Open

Comments: According to DHS's May 2013 statement of actions to address the recommendations in GAO-13-268, once USDA completes its study of AQI fee rates and adjusts rates to better align with AQI program costs, CBP will meet with USDA to determine fee sharing percentage based on the AQI costs incurred by each agency. CBP has inquired with the USDA about the status of the study examining AQI fee rates and costs and is currently awaiting notification on the outcome of the study. In October 2013 CBP told us that implementation of this recommendation is still awaiting USDA's review of the AQI fee rates and costs study. In April 2014, the USDA Animal and Plant Health Inspection Service (APHIS) published a proposed rule to add new AQI fee categories and adjust the rates of some of the existing fee categories. According to APHIS, the updated fees revenues collected will be shared with CBP based on the respective costs for each agency. According to an APHIS official, as of January 2015, APHIS plans to publish a final rule by the spring of 2015.

Recommendation: To better align the distribution of AQI fee revenues with AQI costs, the Secretaries of Agriculture and Homeland Security should work together to allocate AQI fee revenues consistent with each agency's AQI costs.

Agency Affected: Department of Homeland Security

Status: Open

Comments: In April 2014, the USDA Animal and Plant Health Inspection Service (APHIS) published a proposed rule to add new agricultural quarantine and inspection (AQI) fee categories and adjust the rates of some of the existing fee categories. According to APHIS, the updated fees revenues collected will be shared with CBP based on the respective costs for each agency. According to an APHIS official, as of January 2015, APHIS plans to publish a final rule by the spring of 2015.

Recommendation: To better align the distribution of AQI fee revenues with AQI costs, the Secretaries of Agriculture and Homeland Security should work together to allocate AQI fee revenues consistent with each agency's AQI costs.

Agency Affected: Department of Agriculture

Status: Open

Comments: In April 2014, the USDA Animal and Plant Health Inspection Service (APHIS) published a proposed rule to add new agricultural quarantine and inspection (AQI) fee categories and adjust the rates of some of the existing fee categories. According to APHIS, the updated fees will enable APHIS to maintain a 90-day reserve in the AQI account reserve. According to an APHIS official, as of January 2015, APHIS plans to publish a final rule by the spring of 2015.

Recommendation: To better align the distribution of AQI fee revenues with AQI costs, the Secretary of Agriculture should establish an AQI reserve target that is more closely aligned with program needs and risks, based on past experience.

Agency Affected: Department of Agriculture

Status: Open

Comments: In April 2014, the USDA Animal and Plant Health Inspection Service (APHIS) published a proposed rule to add new agricultural quarantine and inspection (AQI) fee categories and adjust the rates of some of the existing fee categories. The proposal would eliminate the cap on railcar fees and thereby the prepayment of these fees, ensuring that railcar fees are no longer collected in a manner that does not conform to USDA regulations. According to an APHIS official, as of January 2015, APHIS plans to publish a final rule by the spring of 2015.

Recommendation: To ensure that inspection fees are collected when due, the Secretary of Agriculture should revise its processes for collecting AQI railcar fees to conform to USDA regulation.

Agency Affected: Department of Agriculture

Status: Open

Comments: According to the Department of Homeland Security's May 2013 statement of actions to address the recommendations in GAO-13-268, Customs and Border Protection (CBP) will develop an automated mechanism to verify that trucks, private aircraft, and private vessels pay applicable inspection user fees and alert personnel when fees are not paid. Upon completion of this mechanism, CBP will distribute appropriate guidance and training to field personnel. According to CBP, as of November 2014, CBP was developing and considering alternatives for automated mechanisms to ensure that truck, private aircraft, and private vessel fees are collected when due.

Recommendation: To ensure that inspection fees are collected when due, the Secretary of Homeland Security should establish internal controls to alert personnel when fees are not paid, and use available information to verify that arriving trucks, private aircraft, and private vessels pay applicable inspection user fees.

Agency Affected: Department of Homeland Security

Status: Open

Comments: In April 2014, the USDA Animal and Plant Health Inspection Service (APHIS) published a proposed rule to add new agricultural quarantine and inspection (AQI) fee categories and adjust the rates of some of the existing fee categories. The proposal would institute a new AQI fee for conducting and monitoring treatments. According to an APHIS official, as of January 2015, APHIS plans to publish a final rule by the spring of 2015.

Recommendation: To help ensure that AQI fee rates are structured to maximize economic efficiency and equity while minimizing administrative burden, the Secretary of Agriculture should charge user fees for treatment services.

Agency Affected: Department of Agriculture

Status: Open

Comments: In April 2014, the USDA Animal and Plant Health Inspection Service (APHIS) published a proposed rule to add new agricultural quarantine and inspection (AQI) fee categories and adjust the rates of some of the existing fee categories. The proposed fees would not introduce separate fees for monitoring compliance agreements for regulated garbage, but would includes the costs of those activities in the fees assessed on arriving international passenger and vehicles. According to an APHIS official, as of January 2015, APHIS plans to publish a final rule by the spring of 2015.

Recommendation: To help ensure that AQI fee rates are structured to maximize economic efficiency and equity while minimizing administrative burden, the Secretary of Agriculture should charge user fees for the costs of monitoring compliance agreements for regulated garbage.